BENGALURU: In a circular released on Tuesday, the Central Board of
Direct Taxes has warned the taxpayers who do not declare all their
interest income in their ITRs to correct their ways. They have been
asked to re-file and rectify their returns for FY 2013-14 onwards.
You'll have to declare even those interest incomes where Form 15 G/H
have been filed and the total exceeds the maximum amount not chargeable
to tax, that is, Rs 2.5 lakh. Only interest income up to Rs 10,000
exempted under Section 10 may be left out. The deadline for this is 31st
March 2016. If missed, you will be liable to pay a Rs 5,000 penalty
under avoid penalty Section 271F of the I-T Act.
While form 26AS reflects only those payments on which tax has been
deducted, the department can track your other deposits and interest
payments received without deduction of tax too via information received
from banks and other financial institutions. "Information regarding
interest earned by individuals and business entities on term deposit is
filed with the Income Tax Department by banks including co-operative
banks and other financial institutions and state treasuries, etc," said
the circular.
In an online survey conducted by www.economictimes.com last August, 30%
of the 2,168 respondents believed that interest of up to Rs 10,000 from
bank FDs is tax free in a year. However, as per the rules,the exemption
under Section 80TTA is only for the interest on the savings bank
accounts. What one earns from on fixed deposits and recurring deposits
is fully taxable. You also need to declare all those interest income
where TDS has been deducted or you have filed Form 15 G/H.
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